TACO BELL CASE

Client History 5,800 Restaurants in the U.S.

80% are owned by independent franchises.

Founded March 21, 1962 by Glen Bell at the age of 25.

Bought by PepsiCo in 1978 and grew rapidly.

Revenue of 2.1 billion USD in 2011.

MISSION STATEMENT

We take pride in making the best Mexican style fast food providing fast, friendly and accurate service.

We are the employer of choice offering team members opportunities for growth, advancement, and rewarding careers in a fun, safe working environment.

We are accountable for profitability in everything we do, providing our shareholders with value growth.

Background Timeframe 1983 – 1994

1983-1988: Establish direction and incremental

redesign

1988-1991: Transform the business

1991-1994 Create a learning organization

TRANSFORMATION

In 1988 Taco Bell launched the value initiative, lowering the price of new items and introduced Free Drink Refills.

It also began the three-tier pricing strategy which remained the core of the value offering through 1994.

1988-1991Transform the business

K-Minus Outsourcing much of the preparation work Allowed staff, and especially managers to

concentrate on managing FACT

Survey of customers needs Value Pricing

TACO Information and communication support

tools

1991-1994Create a learning organization

Value strategy evolution

Points of Access (POA) Expansion

Team-Managed Units / Span of Responsibility

Shared Resources

Reengineered Solution

Solution Reengineering the setup at Taco Bell involved several steps, including;

Complete reorganization of human resources Dramatic redesign of operational systems Creation of jobs like “market manager” Replacing area supervisors with market

managers and reduce their numbers. Eliminating district managers and promoting

restaurant managers.

Reengineered Solution

They also changed their restaurant structure by:

•Limiting the kitchen area by from 70% to 30%

•Increasing the customer area from 30% to 70%

•Doubling the seating capacity in the area available

Additionally, re-engineering led Taco Bell to introduced two new methodologies, namely K-Minus and TACO (Total Automation of Company Operation)

K-Minus

K-Minus:-K-Minus means kitchen less restaurant, based on nature of the company. All of their food was cooked outside the restaurant at central locations.

This stemmed from the concept that food should be retailed instead of being manufactured.

TACO

TACO (Total Automation of Company Operations):-It provides each restaurant with an MIS facility and empowered the employees with computer know-how. It eliminated paper work and allowed more time to be spent on the customers. Such programs serve as agents of change for more innovative ideas like new and varied points of distribution (like street corners, concession stands etc)

FLOOR PLAN

Simplified Taco Bell Process Map

EPS-I Process Engineering 13

Customer Orders

Order Entered 2

Order Assembled 3,4

Customer Waits

Order Delivered

Ingredients Prepared 1

Number shows worker ID

Taco Bell- Challenges

How does the restaurant handle speed of delivery?

How is customer wait time reduced?

Where does it use Pull and/or Push approaches?

How does it handle bulges in demand?

EPS-I Process Engineering

14

Taco Bell- Challenges

How does Taco-Bell meet other customer requirements? Low cost

Ingredients, central preparation of food, small site, low wage labor

Consistency Training, uniform measures

Safe, clean, convenient, pleasant surroundings Well?

How can operations be improved?EPS-I Process Engineering

15

Strategy 1 Since the real estate prices are increasing

which is resulting in a high per sq. feet cost, there are 2 strategies which can help is optimizing:

Build more drive through take away outlets.

Each existing and new outlet should have 2-3 take away windows to reduce the traffic at each window thereby improving the quality(in terms of reducing service time).

Strategy 2

A major problem being faced by Taco Bell is of allocating a dedicated line for customized menu items.

This can be resolved to a great extent if the menu items are standardized to a greater extent – More MTS and less MTA

Push Pull

Strategy 3

The order winners in the previous model were: Fast Service Accurate Orders Cleanliness Appropriate Temperature

• These winners had now transformed to Order Qualifiers in the current model.

• The new Order Winners that can be used to sustain business are:

Home Delivery Unlimited Refill of Pepsi with orders

Change of Mission Statement

With advent of modernization and fierce competition we need to strategize as to not only position as Mexican food, rather as a Fast food chain.

This would be an appropriate step as we would be able to withstand tough competitors and can attract new customers. So we would be able to be a part of order winners.

Training

Looking at the exhibit (9) we can easily interpret that the Mc Donald has overshadowed Taco Bells in terms of friendliness. As a team we do believe that the training of the crew is an important integral part of the fast food chain. This brings in more of the business. In terms of operation we can have the best utilization of the available resource and can minimize the idle time.

Current Set Up

For the current model we have three lines :-1. One or two for standard food items(made

to stock)

2. Third one for special order

Please find the diagram in the next slide

Assumption1:- If we remove the customized items.

Outcome:- This would help us as:-1. Speed of service will increase

2. Cost of idle labor at will reduce, there by profitability can be increased

Result:- The resources are not constrained because of the absence of the third line

Assumption 2:-The number of special orders are way less as

compared to the standard orderOutcome:-1. We can dedicate all three lines to standard

order and can use a line for special order when required.

2. The average waiting time for the customer would be reduced

Result:- The 3rd line that was idle can be used effectively and as a result high speed can be gained

Another bottleneck that we have come across is window bottleneck Recommendation:-

1.Can have two to three windows that can take on the order.

2.We can have pre online booking of food via Taco bell website. So this would save a lot of time for the customer as they need not queue up

THANKS